Microsoft Corporate CitizenshipRealizing Potential through People, Technology, and Partnerships

AtMicrosoft,ourmissionistohelppeopleandbusinessesaround theworldrealizetheirfullpotential.Sincethefoundingofour company,wehavefeltanintenseresponsibilitytochangethings forthebetter.Itisunderscoredbyourcitizenshipprograms,which focusonincreasingaccesstotechnologytohelppeopleimprove theirlives,particularlyinunderservedcommunities.

Astheworld’slargestsoftwarecompany—withnearly90,000employeesandalmost700,000partnersinover100countries—werecognizethatMicrosofthasanimportantroletoplayinhelpingtoadvancesocialandeconomicopportunitiesincommunitiesaroundtheworld.Weworkcloselywithgovernments,communityorganizations,andotherbusinessestosupporteffortstotransformthosecommunitiesthroughthepassionandexpertiseofourlocalemployeesaswellasthefinancialandsoftwareresourcesofthecompany.Infiscalyear2009,MicrosoftandouremployeesprovidedoverUS$560millionincash,services,andsoftwaretononprofitsaroundtheworldthroughlocalized,company-sponsoredgivingandvolunteercampaigns.

Intoday’seconomicenvironment,it’simportantthatbusinesses,governments,communityorganizations,andindividualsworktogethertoprovidethetraining,infrastructure,andtechnologythatenableexpandedopportunitiesandsustainableeconomicgrowthandprosperity.Withthesupportofouremployees,andworkingwithourpartnersaroundtheworld,IbelievethatMicrosoftwillcontinuetomakepositiveandlastingcontributionstosociety.

Welcome

Steven A. BallmerChiefExecutiveOfficerMicrosoftCorporation

OurMissionAtMicrosoft,ourmissionistohelppeopleandbusinessesaroundtheworldrealizetheirfullpotential.Thiscommitmentisrootedinourcultureandreflectshowandwhywedobusiness.Ourcitizenshipworksupportsourmissionandisdefinedascorporateactivitiesthatincreasebusinessvalueandbenefitsociety.Astheworld’slargestsoftwarecompany,webelievethatwehavethecapacitytohelpimprovethelivesofpeopleeverywhere.

Throughourcitizenshipwork,weseektoaddresssomeoftoday’stoughestchallengesandcreatenewsocialandeconomicopportunities.WedothisthrougheffortslikeUnlimitedPotential,wherewecombineourcorestrengths—technologyandpassionateemployees—withthecompetenciesofthousandsofpartnersfromaroundtheworld.Thisapproachmirrorsourbusinessstrategy,wheresharedgoalsareachievedbyworkingwithanecosystemofcommittedpartners,includinggovernments,nongovernmentalorganizations(NGOs),internationalorganizations,otherbusinesses,academics,andcitizens.

Weengageonpublicpolicyissuesrelatedtohowtechnologyisusedinsociety.Wearestrongadvocatesoftherolethattechnologycanplayinstrengtheningeconomies;itsabilitytohelpaddresstheproblemsfacedbysociety;thebenefitsofanopen,fair,andsafeInternet;andtheresponsibilitieswehavetooperateourbusinessinaresponsibleandsustainablemanner.

Everyday,ourworkisguidedbyourstakeholders—ouremployees,partners,customers,shareholders,andcommunities.Ourbusinessisshapedbythesharedsocial,economic,andenvironmentalchallengesthatfaceoursociety.

CreatingaGreatPlacetoWorkOurpeopleareourmostvaluableasset.Theyarecriticaltoachievingourmissionandinspireourcitizenshipefforts.We believe that a diverse and inclusive workforce is fundamental to the success of our business. Our employees pledge to adhere to the highest ethical standards and we pledge to provide a workplace that values creativity, offers equal opportunities, and is free of discrimination.

In this spirit of workplace excellence, we also encourage our people to engage openly with a range of stakeholders—from universities and nongovernmental groups to cause-related groups and governments— and we embrace transparency and accountability across our organization.

Every Microsoft employee is important to our success, and we invest significantly in their development and wellbeing. A Microsoft employee can enroll in a variety of courses on subjects ranging from increasing skills in the Microsoft core competencies of impact and influence, confidence, cross boundary collaboration, and interpersonal awareness, to expanding their abilities as managers and deepening their understanding of specific technologies. New employees participate in Start@Microsoft Employee Orientation, which includes information about the Microsoft organizational structure, diversity, culture, and history. There is also a range of programs that encourage our people to continue learning outside the company.

We understand that everyone works differently and is motivated by different things. That’s why we offer competitive pay and a wide assortment of benefits—to help employees make the most of their life at work and away from it. In exchange for a job well done, we reward employees well, invest in their health and financial future, and—because employees are more than just their job—make sure they have time to pursue their interests and passions away from the office. Even our products and technologies help them balance work with their life away from work by making it easier to work remotely and manage their schedule. We know that employees will enjoy work more and do a better job if they also have a full, rewarding life.

Although we recognize the importance of attractive incentives for long-term business performance, we are fair and measured in the way we compensate our executives. In 2009, we adopted a shareholder “Say-on-Pay” policy. This enables Microsoft shareholders to cast a non-binding, advisory vote every three years on the compensation programs for our senior executive officers. The first vote took place at our November 2009 annual shareholders’ meet-ing, where nearly 99 percent of the ballots received supported compensation practices at Microsoft.

We’re proud of the long history, culture, and commitment of our employees to giving and involvement in their communities. In the United States, we match our employees’ donations dollar for dollar up to US$12,000 annually per employ-ee. In 2005, we took this one step further by matching volunteer time at US$17 per hour through the Volunteer Time Matching program. Since the program launched in 2005, Microsoft employees in the United States have volunteered over 1 million hours. Outside the United States, employees receive three paid days off every year to volunteer at their organization of choice.

Our commitment to responsible leadership extends to our contractors, partners, and suppliers, where we have adopted policies to promote ethical practices. As essential contributors to our business, their business practices are also critically important to us. We require them to adhere to certain standards and have strong monitoring and remediation mechanisms to deal with infractions.

TheMicrosoftbusinessmodelfostersjobcreationandeconomicprosperity.Italsospursinnovationandcreateseconomicopportunitiesworldwide.

DevelopingJobsandOpportunities

Togetherwithournearly700,000partnersandthein-houseITprofessionalswhoworkwithourproducts,wecreateapproximately15millionjobsaroundtheworld,andMicrosoftinvestsUS$9.5billioninresearchanddevelopment.OurbusinesspartnersgeneratedlocalrevenuesforthemselvesofapproximatelyUS$537billionin2009.Thevastmajorityofthesepartnersarelocallyownedsmallbusinessesandentrepreneurswhoreinvestinjobsandknow-howintheirowncommunities.Infact,foreverydollarMicrosoftearns,alocalMicrosoftpartnerwillearnUS$8.70.*

Wearecommittedtolifelonglearning.Fromaneducationalperspective,wearehelpingtoincreaseaccesstotechnologyforteachers,schoolleaders,academics,andstudents.Weencourageinnovativepeda-gogy,supportteacherprofessionaldevelopment,andhelpeducationleadersenvisionandimplementchangethroughPartnersinLearning,a10-year,nearlyUS$500millionprogram,whichhasreachednearly170millionstudents,morethan1,400innovativeschools,and6.8mil-lioneducatorsin112countriessince2003.

Aseconomiescontinuetodevelopandevolve,manyindividualsdonotpossesstheskills,training,andcertificationsneededtosucceed.Today,manyjobsonceconsiderednontechnicalnowrequirecomputingskills.Forthosewhoarealreadyintheworkforce,programsthatprovideongoingeducationandtrainingareneeded.Thosewhoareunemployedoftenrequirenewtechnologyskillstogivethemaccesstotheworkforce.Ourinitiatives—likeElevateAmerica,whichaimstoreach2millionpeopleby2012—aredesignedforunemployedworkerswhosejobprospectsdramaticallyimproveafteracquiringfoundationaltechnologyskills.

Innovationisthefoundationofoursuccessandisimportanttothegrowthandvitalityofcommunities.Wepartnerwithgovernments,universitiesandschools,NGOs,andothercompaniestoinspireandsupportthedevelopmentofnewtechnologies.Byoperatingmorethan100MicrosoftInnovationCentersinover40countries,inaddi-tiontoconductingresearchanddevelopmentactivitiesinmorethan48countries,wesupportcomputingresearchthatbenefitsthoselocaleconomies.We’realsoproudtoruntheMicrosoftImagineCup,anannualcompetitionthatinspiresthousandsoftechnologystu-dentstoimagineandbuildcreativesolutionstosomeoftheworld’stoughestproblems,asdescribedbytheUnitedNations’MillenniumDevelopmentGoals.

“Microsoft Bizspark is a tremendous boost to entrepreneurial startups with access to the latest and greatest Microsoft products. Our product development timelines are aggressive and being able to develop on the latest from Microsoft helps improve developer productivity and have faster time to market.”

—VineetBhatia, Founder,BrainScale

*“AidtoRecovery:TheEconomicImpactofIT,Software,andtheMicrosoftEcosystemontheGlobalEconomy.”IDC,2009.

InvestinginCommunitiesTechnologycanbeanamazingtoolforadvancingsocialandeconomicdevelopment—enablingpeopletoobtainabettereducation,learnnewskillstoearnalivingwage,orstartabusiness.Manycommunitiesacrosstheglobeareunderservedbytechnologyandcannotbenefitfromthejobs,productivity,andeducationaladvancesthatitcansupport.Tohelpsolvethisproblemandopennewopportunitiesforpeoplearoundtheworld,weinvestinthreeareas:providingtechnologyskillstraining,helpingNGOsusetech-nology,andencouragingouremployeestovolunteerandserve.

InitiativeslikeourUnlimitedPotentialCommunityTechnologySkillsProgram—whichsupportsNGOsthatoperateover40,000com-munitytechnologycentersinmorethan100countries,manyofwhichuseourDigitalLiteracyCurriculum—areintegralcomponentsofourtechnologytrainingagenda.

Technologycanalsoenablenonprofitorganizationstoimprovetheirproductivity,increasetheirabilitytocollaborateandbemoreeffective,andextendtheirimpact.Inthepasttwoyears,MicrosoftandouremployeeshavegivenmorethanUS$500millionannuallyincash,software,andservicestoover30,000nonprofitsglobally.

Aswithallofourwork,partnershipsaroundtheworldamplifyourimpactincommunities.ExamplesofcollaborationincludeprojectswiththeInter-AmericanDevelopmentBank,U.S.AgencyforInternationalDevelopment,theOfficeoftheUNHighCommissionerforRefugees,theInternationalYouthFoundation,andtheClintonGlobalInitiative—eachofwhichreachesspecificunderservedcommunities.

“Now more than ever, nonprofits face tighter budgets. Investing in technology to improve the speed and efficiency of humanitarian and conservation aid in the developing world is critical, but it’s tough for organiza-tions to go it alone.”

—WilliamBrindley, NetHopeCEOandExecutiveDirector

Humanitarian and Disaster Relief

Technology can be particularly helpful to people in times of disasters and humanitarian need. Information technology can facilitate communication and decision making, and help in disaster prevention, preparation, response, and recovery. Since 2005, we have provided more than US$44 million in cash and software to NetHope, a collaboration of more than 28 leading, international NGOs that focuses on information and communications technology solutions for humanitarian assistance and disaster response. We have partnered to explore how IT can more effectively foster collaboration, drive innovation, and transform technology with their members. In addition, we have developed special products to help in this area, including Microsoft Vine, which uses text messaging, e-mail, and social network applications to keep people informed when it matters most. Our employees also volunteer time and resources when disasters strike.

Wearededicatedtohelpingoursocietyacceleratethetransitiontoacleaner,moreenergy-efficienteconomybyusinginformationtechnologytoimproveenergyefficiencyandaccelerateresearchbreakthroughs.

EnablingEnvironmentalSustainability

To help make this a reality, we’re focused on three areas:

First, we are striving to reduce the energy use of information technology. For example, we designed the Windows 7 operating system to optimize energy efficiency, cutting users’ energy costs and carbon footprint. Our new data center facilities are designed to be up to 30–50 percent more efficient than other industry data centers built just a few years ago. Microsoft is working with leading companies to use software to drive significant energy efficiency gains in everything from buildings and transportation to man- ufacturing and energy grids. We’ve also developed software to help businesses and governments measure carbon emissions and formed partnerships with organizations, including the Clinton Climate Initiative and the Carbon Disclosure Project. For consumers, Microsoft released Hohm, an online applica-tion that helps people better understand home energy usage and get recommendations to conserve energy and save money.

Second, our researchers are working with leading scientists and institutions to address the most pressing environmental issues. With partners ranging from Cambridge University to the United Nations Environment Programme, we’re creating tools, technologies, and models to help accelerate scientific discovery on a global scale. We’re also working with organiza-

tions such as the European Environment Agency to help citizens and policymakers visualize and analyze the implica-tions of climate change.

Third, we are working to incorporate sustainable practices into our operations. In 2009, we pledged to reduce our global carbon emissions per unit of revenue by at least 30 percent, compared with 2007 levels, by the year 2012. Steps Microsoft will take to achieve this goal include improving energy efficiency in our buildings and operations, reducing air travel, and increasing our use of renewable energy.

“Ourenvironmentischanging.Weallnoticesmalldifferenceswhereweliveorregularlyvisit.EyeOnEarthgivesallofustheopportunitytoinformandbeinformedofsuchchanges.TheMicrosofttechnologybehindEyeOnEarthandAirWatchmakesenvironmentalinformationmuchmoreaccessible.Asmorepeopleunderstandwhat’shappeningintheirarea,morewillcontributetosolvingenvironmentalproblems.”

—ProfessorJacquelineMcGlade, ExecutiveDirectorofthe EuropeanEnvironmentAgency

Weacknowledgethattheworld’sproblemswon’tbesolvedbyonecountry,oneNGO,oronecompanyactingalone.

PromotingResponsibleLeadership

Solutions require leadership and initiative, but their ultimate success relies on cooperation and dialogue with governments, NGOs, other companies, and our customers.

For example, we believe that safeguarding free expression on the Internet is best achieved by working together with a broad set of stakeholders to fashion guidelines for com- panies responding to restrictions on free expression and privacy. This is why we’ve established the Global Network Initiative (GNI) with other leading companies, academics, and interest groups. The GNI has developed guidance for the technology sector on how to protect the human rights of all online users, and also a framework for shared learning and collaboration on public policy.

Helping protect children from online harms is another place where our impact is multiplied when we work with others. We’ve run various campaigns and developed the Child Exploitation Tracking System (CETS), but their success fundamentally relies on collaboration with other Internet companies and law enforcement agencies, among others.

We also look to other companies and experts to learn from best practices. For example, the long-term financial sustainability of our business depends on good corporate governance. Therefore, we have adopted a number of

practices and principles that meet or exceed U.S. industry standards. Although we are recognized for our leadership in this area, we are always open to dialogue and new ideas. We are guided by the work of organizations such as the American Bar Association and the Aspen Institute, in addition to our own shareholders and independent directors.

As signatories to both the United Nations Global Compact and the United Nations Millennium Development Goals, we work in partnership with a range of public and private sector partners to address the world’s most pressing societal issues. This engagement is foundational to all of our corpo-rate citizenship work.

“CETSallowsthepolicetoassembleaninvestigativepuzzlewherepiecesarespreadoutoverCanada,andinsomecasesaroundtheworld.BycollaboratingusingCETS,policeareabletoshareinformationregardlessofjurisdiction.”

—ConstableDetectiveArnoldGuerin, TechnologyManager,NationalChildExploitation CoordinationCentre,RoyalCanadianMountedPolice

Weknowthatbychannelingthepassionandtalentsofourpeople,deployingourtechnology,andcollaboratingwithourpartners,wehavethepotentialtohelpdramaticallyimprovetheworld.Webelievethisisourresponsibility.Ourmissionisambitious,andourcorporatecitizenshipworkiscoretoachievingit.

Learnmoreaboutourcitizenshipwork:www.microsoft.com/citizenship

Readstoriesfromaroundtheworld:www.microsoft.com/localimpactmapBecomeafriendorfanonFacebook:www.facebook.com/microsoftcitizenshipFollowusonTwitter:www.twitter.com/msftcitizenship

©2009 Microsoft Corporation. All rights reserved. 1209 Part No. 098-116073

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